Saturday, March 08, 2008
If I had time I would have a blog just on all the news piling up on urban fiscal distress. The news in Vallejo is quiet for the moment (update: more background on the Vallejo situation is in the SF Chron), and I suspect in the end they will work something out to keep things above water for now. The bigger news I had not been following was how Jefferson County Alabama (home of Birmingham, the Pittsburgh of the South coincidentally) is in default of credit terms and is also floating the potential of a chapter 9 bankruptcy. It's a different case altogether and looks an awful lot like Orange County's bankruptcy in the early 1990's. Seems like Jefferson County invested in some derivative swaps that didn't go well for them and now they are underwater. Why governments think they have the option of taking on risk like a hedge fund is beyond me, but even odder given the well-documented experience of Orange County which would become the largest Chapter 9 bankruptcy to date.